THE LAUNCH OF no-frills, low-fare, airlines has reduced the cost of flying for US travelers by $6 billion so far, says a new study by the US Department of Transportation.
In cities where low-cost US carriers operate, the average cost of a one-way ticket has dropped by $54 or $70 if a city serves as a major airline hub. Competition has led established US long-haul carriers to lower their fares, and the availability of cheap tickets has encouraged more people to fly.
The study shows that low-fare carriers now compete in markets, which account for almost 40% of domestic travelers, and they are rapidly expanding their operations. Most growth in recent years has been in markets where lower fares have stimulated demand.
The study says that between 1988 and 1995 passenger numbers in markets with low-cost carriers more than tripled, from about 33 million to over 100 million. Markets without low-fare carriers lost passenger numbers. The study shows that low-fare airlines can compete effectively in "fortress" hubs of major scheduled carriers. Evidence also suggests that low-fare air carriers and the established majors can co-exist peacefully.
Source: Flight International
